CFPB Charges Credit Card Companies Suppressing Actual Payments From Credit Reports

Not Reporting Actual Payments

Paying more than the monthly minimum on your credit card balance has several financial benefits. One of those benefits is to improve your credit rating. However, the Consumer Financial Protection Bureau (CFPB), charged last week that major credit card companies are deliberately not reporting cardholders’ actual payments.

Actual payments, as the term implies, refer to the exact amount paid. For example, if the minimum payment was $100 and you paid $200, the actual payment would be $200.

Unique to Credit Card Companies

What the CFPB terms the most recent “suppression” of your actual payment history by some of the largest credit card companies was revealed in 2020.

In a quarterly report issued in November 2020, the CFPB found that companies financing student loans, car loans, and mortgages reported actual payments 90 percent of the time. That was part of an upward trend from those lenders.

“However, shares of revolving and credit card accounts with actual payment information furnished significantly declined over the same time period.” stated the CFPB report. “The share of credit card accounts containing actual payment data peaked in the fourth quarter of 2013 at 88 percent and has since declined by more than half to 40 percent.”

Impact on Your Wallet

Actual payment data is routinely used by credit card companies to determine which of their customers get the best offerings, according to the CFPB. Not reporting that information for other financial institutions to see makes it more difficult for those companies to know what credit rates and products to offer consumers.

“Our monitoring of credit markets suggests that the inclusion of actual payment information in credit reports could impact consumers’ credit scores by 20 points or more,” says the CFPB.

Those extra 20 points could lead to more and better financial offers, including a home loan. Having accurate information, including actual payments, can give more people access to mortgage credit, according to Fannie Mae.

Why Withhold Information

Credit card companies responding to a CFPB letter last May indicated competition led to their suppression of actual payment information.

“The responses suggested companies withheld information in an attempt to make it harder for competitors to offer their more profitable and less risky customers better rates, products, or services,” according to the CFPB.

Why It Is Important

Paying more than the minimum on credit card balances, not only reduces your debt, it reduces your credit utilization ratio. That is the relation of your balance to your card limit. As an example, if you owe $3,000 on a credit card with a $5,000 limit, your credit utilization ratio is 60 percent.

The lower your ratio, the better. That is because your credit utilization ratio makes up about 30 percent of your overall credit score, according to Experian.

With credit card debt and interest rates on the rise, now is a good time to reduce your balances.

Americans are carrying $925 billion in credit card debt, according to Lending Tree. The average balance per person is $6,569 with an average interest rate of 19.07 percent.

The average interest rate on a new credit card is 23.55 percent. That is up from 23.39 percent last month.

Paying more than the monthly minimum, especially at today’s rates, can dramatically reduce the time to pay off your credit card and save you thousands of dollars.

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Max Erkiletian

Max K. Erkiletian began writing for newspapers while still in high school. He went on to become an award-winning journalist and co-founder of the print magazine Free Bird. He has written for a wide range of regional and national publications as well as many on-line publications. That has afforded him the opportunity to interview a variety of prominent figures from former Chairman of the Federal Reserve Bank Paul Volker to Blues musicians Muddy Waters and B. B. King. Max lives in Springfield, MO with his wife Karen and their cat – Pudge. He spends as much time as possible with his kids, grandchildren, and great-grandchildren.